Is Vista helping boost PC sales?

It's tough to get a handle on whether Microsoft's OS is spurring people to buy, or if they'd be buying anyway.
Written by Ina Fried, Contributor
Speaking to a crowd of hardware engineers last week, Microsoft Chairman Bill Gates trumpeted the fact that the company has sold 40 million copies of Vista since the operating system hit the market.

But does that milestone mean the operating system is causing more PCs to be sold?

It's a natural question to ask, but a difficult one to answer. One reason it's hard to suss out Vista's impact on PC sales is that consumers don't really decide whether they prefer a new operating system. When Microsoft releases a new operating system, it becomes the default on nearly all machines sold at retail stores. So if consumers want a new PC, they basically get Vista.

That makes it tough to gauge whether Microsoft's latest creation is actually spurring people to buy new PCs. Market researcher In-Stat issued a report Wednesday saying Vista is not having a major impact on the PC market. The firm said some people delayed purchases last year to wait for the new operating system, a move that added some sales to this year, but that the software is not leading others to speed up their new PC purchases.

"My view is that, as a motivating factor to go buy a PC, Vista is not enough," said Ian Lao, the In-Stat analyst who wrote the new report.

"There are certainly things you can do with Vista. The computer makers certainly have not pushed the envelope on any of those things quite yet."

--Stephen Baker, analyst, NPD

But there hasn't been a groundswell of grumbling over the new operating system either. "It's not the scenario like (new) Coke and Coke Classic," Lao said. "There isn't a big revolt going on."

Dell did see enough demand for XP that it has brought back the older operating system as an option on some consumer machines. Dell, Hewlett-Packard and others still offer XP for small- and medium-business customers as well.

As for the PC market as a whole, Lao said it's shaping up largely as expected, something he said he foresees continuing.

"I see the rest of the year panning out, for the most part as it would have originally," he said. Consumers "will purchase a PC if they were already planning to."

NPD Techworld analyst Stephen Baker said that the market has shifted somewhat during the early part of this year. While the trend toward notebook computers has continued, desktop sales and pricing have finally stabilized some, although Baker said he doesn't attribute either those changes or overall consumer sales patterns to Vista's release.

"That would require you to believe that on the consumer side, people actually buy their PC based on what operating system is inside, and I really don't believe that is the case," Baker said.

Microsoft, for its part, says Vista has helped the overall PC market as well as the company's own business, noting that the operating system was a key part of its strong quarterly earnings report and contributed to a PC market that grew 10.9 percent worldwide in the first quarter, according to IDC.

"Though it's very early in the product lifecycle, we're pleased with the market response to date for Windows Vista," Microsoft said in an e-mailed statement. "We're looking forward to continued growth and broad adoption of Windows Vista around the world."

The corporate factor
An influential factor in the PC market is businesses upgrading their machines, and there has been little indication that corporations are buying large numbers of PCs as part of a rush to Vista. Microsoft has maintained that the corporate move to Vista will outpace prior transitions, most notably when it claimed in September that business adoption of Vista in its first 12 months would be twice that of Windows XP.

An HP representative said Wednesday that the company is starting to see increased interest from some corporate customers in Vista, perhaps a sign that some businesses have completed the testing needed to qualify the new operating system. "There is now growing evidence that transitions are under way in large corporate accounts," the HP representative said.

But others are predicting a far slower pace of Vista adoption, looking to next year as the time when most businesses will start to consider buying Vista. Even in the PC business, some of Microsoft's closest partners, notably chipmaker Intel, have yet to push Vista out to their own employees.

Lao said many businesses upgraded large numbers of PCs in 2005 and 2006, making them unlikely to move to Vista this year or even next year.

"I'm seeing this more like a 2009, 2010 thing, where corporations will start to make wholesale conversions," Lao said.

Another reason Vista may not be having much of an impact on PC sales is a lack of software and hardware targeted specifically for the new system.

While Microsoft has put a lot of effort into ensuring compatibility with existing software, it will take time before there are any killer apps specific to Vista. While some of Vista's benefits, such as built-in desktop search, are available out of the box, many of its advances, such as its new presentation engine or its peer-to-peer sharing technology, really only come alive once developers write programs that take advantage of those features.

On the hardware side, there have been a few showcase Vista-optimized PCs, most notably HP's TouchSmart all-in-one and a sleek, white Toshiba Portege with a secondary "SideShow" display. But many of the computers on the market largely resemble their XP predecessors both inside and out.

"There are certainly things you can do with Vista," Baker said. "The computer makers certainly have not pushed the envelope on any of those things quite yet."

Some additional PCs that harness Vista features are expected in the second half of this year, as computer makers gear up for the back-to-school and holiday buying seasons.

"We're going to see new industrial designs from almost all the major computer makers," said Samir Bhavnani, research director at Current Analysis West. "I think you are going to see Vista spur growth in the back half of this year."

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